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J.C. Penney Company, Inc. (JCP) Expected to Backpedal

Two large blocks of puts were purchased on JCP

by 12/5/2013 1:58 PM
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Option Brief: J.C. Penney Company, Inc. (NYSE:JCP) is extending yesterday's declines, following news that hedge fund manager J. Kyle Bass sold his stake in the retailer. What's more, the stock was placed on the short sale restricted list, causing its put volume to spike to almost three times the average intraday norm.

The most active option of the day is the March 2014 8-strike put, thanks to two large blocks of 10,000 contracts each that traded here. According to Trade-Alert, the blocks were purchased; meanwhile, implied volatility at this strike has increased, suggesting fresh bearish bets were initiated.

It appears today's put player is banking on JCP -- currently down 8.5% to trade at $8.84 -- continuing its downtrend over the next three-plus months. Specifically, the trader anticipates the equity will slide beneath the $8 level by March 2014 options expiration.

From a broader technical perspective, J.C. Penney Company, Inc. (NYSE:JCP) has been in rebound mode since bottoming at a multi-decade low of $6.24 in late October. Despite today's blow, the stock stands 41.7% higher than the aforementioned low. Not to mention, on an intraday basis, the equity spent time in the double digits during the past five sessions.


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